Understanding the FT VEST High Yield & Target Income ETF (HYTI)

What this ETF is trying to do

The FT VEST High Yield & Target Income ETF (HYTI) is an exchange-traded fund listed on the NYSE. Based on its name, this fund focuses on providing high yields and target income to its investors.

What the numbers show

When looking at an ETF, it is important to understand the difference between "price return" and "total return."

• Price Return: This measures only the change in the share price. For HYTI, the year-to-date (YTD) price return is approximately -7.35%. The one-year price return is approximately -7.21%. This means the share price has gone down over these periods.

• Total Return: This measures the change in value including the money paid out as distributions. For HYTI, the YTD total return is approximately 0.90%, and the one-year total return is approximately 2.77%.

Because the total return is higher than the price return, it shows that the distributions helped offset some of the share-price decline.

To visualize the price change, we can look at an estimated example. The estimated price from roughly one year ago was $19.76. The current price is $18.33.

Income and distribution explanation

This ETF focuses on providing cash to investors. The distribution yield is approximately 10.75%. This number describes the cash distributions relative to the current ETF price.

The fund typically pays out money monthly, with 12 payments recorded over the last year. These distributions are often paid on Mondays. It is important to remember that a high distribution yield does not mean the investor earned that full percentage as their total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in a fund decreases. While a falling market price does not always mean the NAV has declined, we use "erosion scores" to measure risk.

HYTI has an erosion score of 75, which is labeled as "mild price erosion." This is a measurement of risk and is not a guarantee that the fund's value has collapsed. There is no severe erosion-risk flag for this ETF.

Pros

• Higher Total Returns: While the share price has declined, the total return (which includes distributions) has remained positive for both the year-to-date and one-year periods.

• Regular Income: The fund provides a high distribution yield with a monthly frequency.

Cons

• Share-Price Decline: The price return has been negative for both the year-to-date and one-year periods.

• Erosion Risk: The fund shows a "mild" erosion-risk score.

Beginner takeaway

When looking at high-yield ETFs like HYTI, it is important to look at both the share price and the total return. A falling share price can be offset by regular cash distributions, which is why the total return is higher than the price return. However, investors should always monitor erosion-risk scores to understand how the share price is behaving over time.